Government sets up two panels to rewrite RoDTEP and RoSCTL refunds

India has set up two panels to review and reframe the two main tax refund schemes for exporters. Mint reported the move on 21 October, citing three people close to the development¹.

The RoDTEP panel is headed by Director General of Foreign Trade Lav Agarwal. The RoSCTL panel is headed by Arti Kanwar, additional secretary in the textiles ministry. Both have senior officials and industry executives as members¹.

The trigger was a recommendation late last month by the expenditure finance committee for better targeting and optimal use of funds¹. The committee, an interministerial body under the expenditure secretary, examines large central schemes before they reach the Cabinet¹.

Nearly Rs 2 trillion over five years

The commerce ministry has sought more than Rs 1.3 trillion for RoDTEP over five years, 70% more than in the previous five years. The textiles ministry wants the RoSCTL outlay to rise by half, to about Rs 65,000 crore¹. Together the two asks come to nearly Rs 2 trillion¹.

Both schemes exist to keep exports zero-rated. They refund central and state levies outside the GST net, including levies on fuel and electricity, stamp duty and mandi tax, paid on inputs used in exported goods¹.

RoDTEP covers a wide range of sectors, including special economic zone units and bonded warehouses, and refunds 0.3% to about 4.7% of the free-on-board value of a consignment¹. RoSCTL is largely focused on garments, apparel and made-ups^1, 3 and refunds 1.7% to 8.2%¹. The Economic Times reported the RoDTEP band as 0.3% to 3.9% on 29 September². Both ministries have maintained that the schemes comply with World Trade Organization rules¹.

RoDTEP began in 2021 and covers more than 10,700 tariff lines, while RoSCTL has been running since 2019². Refunds are issued as duty credit scrips, which exporters can sell to importers³. Small exporters have often received less than the announced rate because scrips sell at a discount, The Economic Times reported in 2024³.

Rates hold until 31 December

The government extended both schemes by three months to 31 December at the end of September^2, 3. The commerce ministry said existing RoDTEP rates and value caps would not change under the extension². That followed a six-month extension granted in April⁴.

The Commerce Department had asked for a five-year extension before the earlier 30 September deadline, arguing that refunding embedded input taxes is reimbursement rather than an incentive⁴. BusinessLine reported on 18 October that the Commerce Department is still in talks with the Finance Ministry. The ministry is yet to be convinced the schemes are effective in boosting exports, and some exporters fear discontinuation⁴.

Niti Aayog is separately set to evaluate the effectiveness of both schemes, The Economic Times reported^2, 3.

What changes and what does not

The review is not itself a policy change. RoDTEP rates and value caps stayed as they were under the current extension². The panels' recommendations are likely to be discussed in the coming Union Budget and could become the basis of revamped frameworks¹. Mint's account rests on unnamed people; the newspaper said its queries to the secretaries of expenditure, commerce and textiles and to DGFT were not answered¹.

Money is at the centre of the argument. The Commerce Department has sought Rs 23,000 crore for RoDTEP in 2026-27, against a budget estimate of Rs 10,000 crore⁴. Exporters received Rs 18,233 crore under RoDTEP and Rs 10,100 crore under RoSCTL in the year ended March 2026¹.

The exposure is uneven. RoSCTL is largely focused on garments, apparel and made-ups^1, 3. RoDTEP reaches further, to special economic zone units and bonded warehouses¹, and is important for MSME exporters in labour-intensive sectors⁴. Textile and garment exports grew about 2.4% in the first half of 2026-27, while merchandise exports overall rose 18.5% to $260 billion¹.

Precision will be hard. D.K. Nair is a textiles expert and former secretary-general of the Confederation of Indian Textile Industry. He told Mint that "some level of averaging of levies is inevitable in these kinds of industries", because production is spread over many stages and many firms¹.

What to watch

Both schemes lapse on 31 December unless extended again⁴. Exporters have asked for a five-year extension to secure policy stability⁴. Ajay Sahai is director-general and chief executive of the Federation of Indian Export Organisations. He told Mint last month that continuing both schemes with adequate allocation for another five years "would be extremely important, as it signals policy stability at a very challenging time for exporters"¹.